Was There Ever Any Chance I Was Going to Sell NACCO (NC)?

by Geoff Gannon

I’ve gotten this question a couple times in recent weeks. So, I thought I should address it. First, let’s cover why people have been asking me if I’d sell NACCO. Paying members of the Focused Compounding site have known since October 2nd, that I had 50% of my portfolio in NACCO (NC) bought at an average cost of $32.50 a share. So, the fact this was 50% of my portfolio is probably a big reason people asked whether I’d sell. What were the other reasons?

As the stock went up it got to be a bigger part of my portfolio – reaching nearly 60% of my portfolio about six weeks after I bought the stock – and some people assumed I’d sell to get it back down to 50% or below. Then, two, some people assumed I’d want to “take profits” on a stock that was – at its peak – up almost 40% in something like 6 weeks.

So, let’s look at a chart of NACCO’s stock price since I bought it:

I got a lot of emails about selling NACCO when it first hit the $40 to $42 range and then again when it was in the $44 to $48 range. The stock is now below $40. So, the people asking these questions might make pretty good traders.

However, I think some of the emails I got asking if I’d sell NACCO had more to do with the relative performance of NACCO stock and Hamilton Beach Brands stock once the two were trading separately. Many of the emails mentioned that Hamilton Beach – not NACCO – was the spin-off, so why did I focus on just buying NACCO? After all, I could have bought the “old NACCO” before the spin and then just kept my shares of both NC and HBB. In fact, some people asked if I’d sell my NACCO stock and put some of the proceeds into Hamilton Beach.

If you look at this chart, you can see why they might suggest this:

The truth is: I never considered selling NACCO. There are probably 4 reasons for this:

1)      I don’t trade around a position. I buy all my shares at one point and sell all my shares at another.

2)      I don’t trim positions as they get to be a bigger part of my portfolio.

3)      I don’t “take profits”.

4)      I don’t sell a stock within the first year of buying it.

If something happened to the company that made the stock a lot riskier – I’d considered selling it. But, I would never consider selling a stock within the first year of buying it just because it had gone up 20%, 40%, 80%, or even 160% in price.

I bought NACCO in early October of 2017. I’ll probably first re-consider the position around year-end 2018.

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